Q&A; with Mike Gatto

1) California faces projected budget deficits of close to $20 billion annually for the next several years. What specific steps must the state take to achieve a balanced budget?

To paraphrase Winston Churchill, the next few years are likely to bring more financial “blood, toil, tears, and sweat” to California. This is the result of years of bad policy. I have already taken what I believe is the most significant step towards a balanced budget: The establishment of an enhanced “Rainy Day Fund,” a savings account for the state.

Every household in California tries to follow the simple maxim: When times are good, you save some money for when times are not so good. We must force Sacramento policymakers to follow this common sense approach, and we would not face a deficit of this magnitude if we had put some money aside during the boom years.

So, I just authored a proposed constitutional amendment that would establish this fund, and which also requires us to pay down debt and live within our means, so that we don't burden future generations. I am proud to report that it passed the Legislature last week, and was signed by the governor.

2) Name three programs or departments that should face reductions/elimination, or explain if you cannot.

We need to end the practice of not enforcing state anti-fraud laws. This results in boondoggles, like $69 million in state aid for the impoverished being used on cruise ships and casinos. Adequately supporting the “watchdog” agencies and insisting on enforcement of program regulations would result in significantly fewer losses of taxpayer dollars.

We need to end the practice of forcing taxpayers of well-run cities to pay the exorbitant pension costs of other cities. I am very angry that Glendale residents will be forced to pay the inflated pension costs for an employee who went to work in Bell. I have authored legislation, which is pending, that would cap the taxpayers' exposure to these inflated pension costs. That money could be much better spent by cities to fill potholes, pave roads and pay for other local services.

Finally, we need to end programs that give blatant handouts to special interests, and we need to close the loopholes that allow entities to engage in “offshoring” (where corporations open “headquarters” — often no more than a P.O. Box — in places like the Cayman Islands to avoid paying their fair share of taxes.) When any entity is allowed to shirk its tax burden, it places more of a burden on us. We pay our fair share, and these loopholes and special-interest giveaways must be ended, so that everyone pays their fair share.

3) Name three ideas to raise revenue for the state, or explain if you cannot.

We need to retool our tax system to make it more fair, more consistent and more in line with our 21st  Century economy. Right now, we are living with a 1930s-era tax system that is failing a 2010 economy because the system is so subject to wild fluctuations.

The state generates plenty of revenues, we just need to average them out over a few years. I already mentioned my Rainy Day Fund, the savings account for the state. I'd also like to see two-year budgets, which would force us to lengthen our outlook.

I favor less dependence on the capital-gains tax, which results in greatly reduced revenue when people stop selling houses and stock at a profit. Finally, we should close tax loopholes, end tax dodges, like corporations establishing fake offshore headquarters to avoid taxes, and ending job-killing policies like basing business taxes on payroll, which only forces good-paying jobs out of state.

4) Where do you stand on Proposition 19, legalizing recreational use of marijuana?

I oppose Proposition 19. I also point out that a ballot initiative can only be undone by another ballot initiative, and not by a legislative vote. Unlike most other issues, with ballot initiatives, the only vote that legislators get is our vote in the ballot box.

5) What are the most important steps the state can take to boost private-sector employment?

First, the state should end its practice of basing business taxes on payroll, which is, in effect, a tax on California jobs, and only encourages companies to shift jobs out of state.
Second, we need to invest in infrastructure, like in the days of old, which will not only create jobs in the short term, but make it more attractive for the private sector to locate or expand their operations in California.

Third, we must continue to encourage innovation in emerging sectors, like renewable energy and other technology jobs. Fourth, we must do everything possible to keep in California the industries that we consider traditional Californian industries, like the entertainment industry. We've already lost most aerospace jobs, and that was a huge mistake.

6) What is your top transportation priority for the district?

The 43rd Assembly District is bisected by some of the most congested freeways in the county, and yet still suffers from a lack of comprehensive light rail and public transportation options. During my days with Congressman Brad Sherman, I worked to implement the successful Orange Line in the valley, and will work in the state Legislature to create other functional, flexible public transportation options.

I also believe that we must make our streets safer for cyclists, pedestrians and even other motorists. If that means giving local law enforcement the tools to toughen certain speeding laws in a given neighborhood, then we should do that.

7) What is your top economic priority for the district?

Besides implementing the good-government policies and reforms I've detailed above, my top economic priority is creating jobs and ensuring that our schools have the funds they need to prepare our children for success. It is “penny wise and pound foolish” to expect Californians to be prepared well for future employment if we give education short shrift.

8) Passing a budget or tax increase requires a two-thirds vote in the Legislature. Wouldreducing the requirement to a simple majority help or hurt the state, and why?

It's important to distinguish between these two rules, because they are separate: One rule requires a two-thirds vote to raise taxes, and one requires a two-thirds vote to determine how to budget the existing revenue.

After watching year after year of late budgets loaded with billions of special-interest giveaways to win the votes of the last few holdouts, I think we have to conclude that allowing a majority to pass a budget would result in far less pork.

Our budget process is broken. We are one of only three states in the nation that requires a supermajority to pass a budget.

9) What do you view as your signature issue or priority?

There are certain people who enter the Legislature with a passion for one specific issue, but often those passions get off-track and become a focus on little things, while the big picture is ignored.

The ship is in danger of sinking, and yet some continue to focus on re-arranging the deck chairs. I try to be a big-picture thinker. To the extent that I have one priority, it is fixing our broken tax system so that it is fairer to families, schools and cities, reduces our dependence on boom and bust cycles, and makes sure that special interests are paying their fair share. To the extent that I have one passion, it is good government, as everything else depends on it.

10) Why are you a better candidate for the job than your rival?

I ran for this office because I believe my experience, qualifications, ideas and energy make me the right person to help restore the California that we know and love.

I grew up here, I've lived here most of my life. I believe I understand and represent the needs and priorities of the residents of the district, and will work tirelessly to protect our community and fix the broken budget process in Sacramento.

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